Xbox One Launch Missteps Could Cost Microsoft

In the wake of a disastrous E3 launch cycle for its Xbox One, Microsoft is taking a page from the wrong playbook by doubling down on the most controversial aspects of the entertainment console. After the disaster of Windows 8, you’d think the company would know that owning up to and correcting mistakes quickly is the way to go.

There’s still plenty of time between now and the November release of Xbox One for Microsoft to reverse course, and one has to think that the firm’s marketing brains are now debating the possibilities in Redmond. But publicly this week, Microsoft has done nothing but dig itself a deeper hole.

I wrote about Microsoft’s loss at E3 earlier this week in "Microsoft vs. Sony in Dueling E3 Presentations," and in my PlayStation 4 preview I make the case that Microsoft’s Xbox One is at least the equal of Sony’s coming console. But whether it's hubris, inept marketing, or just the wrong product at the wrong time, Microsoft’s Xbox One messaging is simply ringing hollow with its most important customers: the hardcore gamers that it expects to buy the device in November.

“The Xbox One is the future-proof choice,” he said. “We have a product for people who aren’t able to get some form of [Internet] connectivity. It’s called Xbox 360 … If you have zero access to the Internet, [the Xbox 360] is an offline device. Seriously, [when I saw the complaints about Xbox One] and thought about who was really most impacted [by the always-on requirement], it was a person who said, 'Hey, I’m on a nuclear sub' … I can empathize, if I was on a nuclear sub, I’d be disappointed [too].”

And there you have it: The damage is done not by Sony, which again was quick to capitalize on Microsoft’s Xbox One design decisions, but by Microsoft itself. Having followed Microsoft for 20 years and watched its PR machinations direct the conversation, it’s obvious that Mattrick was obeying a very strict messaging script that required him to communicate key points. But pushing a previous-generation console as a response to very real complaints about a device that has yet to ship was the wrong decision. It just cements the notion that Xbox One isn’t the right product for the right audience.

Indeed, in an earlier editorial called "What if Xbox One is Another Windows 8?," I semi-rhetorically wondered whether the marketing geniuses who thought combining separate mobile and PC operating systems into a single OS weren’t behind the Xbox One’s similarly confused identity. With this device, Microsoft is trying to please too many incompatible groups of users: hardcore gamers, consumers who have bought into the broader Microsoft ecosystem, and casual users who just want to enjoy TV and entertainment services. This mirrors the disconnect with Windows 8, which presents mobile UIs to desktop users and a Windows desktop to tablet users.

Always off. Nix the always-on requirement in a way that makes sense. For example, if you can’t access the Internet, you can’t share games with other users electronically. Make it an option.

Lower the price. Ship a version of the console without Kinect for $399, matching Sony’s price for the PlayStation 4.

Used games. Do not allow third-party game makers to charge a fee for used games. The system works as-is.

Kill stupid features. Live TV is a red herring and only adds to the complexity of the device at a time when the world is in fact moving away from live TV. This one thing stands in sharp contrast to the device’s otherwise leading-edge features.

Ultimately, Microsoft needs to fix Xbox One, not defend it.The Xbox team has been blogging up a storm since the May Xbox One reveal, but most of their posts are defensive in nature, as if by explaining their strategy enough they can get people to understand why their decisions make sense. If they made sense, Microsoft wouldn’t have to explain them so often.

Discuss this Article 73

"Lower the price. Ship a version of the console without Kinect for $399, matching Sony’s price for the PlayStation 4."

Here's a better idea. Ship it with Kinect for $399. MS needs Kinect bundled to drive development for this interface, and they need to out manoeuvre Sony on market-share. MS is presently worth $300 billion, while Sony's market capitalization is a mere $20 billion. They could (and should) loss-lead Sony into oblivion.

While nothing that MSFT has done is deterring me from getting one of the first batch of Xbox One's, I do agree with some of these points:

Price: Bring it down to 450 with Kinect making it cheaper than the ps4 + eyetoy. I think having the Kinect in the box makes it something developers will actually want to develop for (knowing all x1 users have it). The fact that Sony is leaving the Eye out of the Ps4 box means the move will continue to be a segmented market and continue to get terrible games/use.

I see the used game/online requirement as a similar fix. Just remove the disk install requirment and allow the X1 to play from bluray. That would allow you to rent games, trade in games, let kids borrow the disk based games (as it is now).

If they don't change anything, other things I think could help them would be:

1. Make digital games off of XBL cheaper.
2. Create a way to allow your console to check in without a constant internet connection. For instance, enter a code / scan a qr code that is generated by your system that checks in for you (that you could use your cell phone connection for). Especially if its only going to be KB's. That wont kill any data plans. It would still be an inconvenience, but something they probably could implement.

Like I said before, I am getting an X1 day 1 because I prefer the exclusive games coming out at launch but a lot of my Xbox friends are going to PS4 because of these restrictions in place. I hope MSFT listens, but don't see anything being changed. They have a vision and they will not take detours - but they may lose a large amount of their fan base in the process.

I understand that peoples viewing habits have changed over the last few years but there is one thing that will always keep live TV at the forefront....SPORTS! I don't want to see a recorded game or have the experience spoiled by someone running down the street yelling the Seahawks won..the Seahawks won! I do think always on should be extended from 24hours to 30 days so people have the capability to take it on the road etc.

I feel bad for the consumers who aren't aware of the always on requirement and then have a moment of confusion and frustration when it affects them.
Sure, 99% of the time its a non-issue, but explain to Joe-blow that he needs to hook up his Xbox to a mobile hotspot (if he even knows what that is) because he just moved to a new apartment and the cable modem won't show up for another week.

Sony gets massive praise for saying hey we didn't really change anything, but now you need to pay to play online too! It's a shame that Microsoft's policies overshadow all their other announcements as they had a nice showing on the games side.

To be honest, all this drm arguing has depressed my excitement over next gen consoles. I like the games MS showed off, I want to own an X1 for those games. The ps4 has good lineup as well, but right now I don't feel very motivated to buy either.

All I see in comments around the web is how terrible MS is and how it will fail, etc, etc. I can't help but feel a bit depressed.

I personally am ok with the policies, but as you pointed out Paul, there are simple ways to fix this and get people back onboard. I really, really hope MS thinks long and hard about a proper response to cool everyone off. I'd like to get back to being excited about next gen consoles.

Maybe I should get away from the internet communities as well, clear my head of the negativity. I don't know how people take this stuff day in and day out.

Hear your point on Live TV and kind of agree myself given how much I actually watch it. Interestingly, it was my 12 and 9 year old kids that thought Live TV was the coolest feature of the Xbox One when we all watched the first unveiling. Just sayin' - these kids have a good sense for this sort of thing.

I agree that Microsoft has done a terrible job selling this system, particularly with regards to the check ins. And while the 24 hour check in bothers me somewhat (although it realistically would probably never affect me), given what they're trying to do, I think it would be difficult to improve that without making things potentially more complicated and/or having unacceptable (to the publishers) opportunities for multiple games running from a single purchase.

What would keep someone from installing a game using the disc and then passing the disc to someone else who could also play it on a console not hooked to the internet? How could the system validate the license is already in use if it's not connected to Xbox live?

Yes, doing something like the Steam offline mode would be an option, but it would require checking out the license ahead of time, so it would be OK for a planned situation, but not for an unexpected outage. Also, I wonder if there would be any interactions with the family sharing option. Would it affect anything if the "parent" checked out the game, and could the "children" check out games for offline play? Would it have to be checked out from the console it was downloaded/purchased on, or could it be done on a secondary console? If they were done with the offline license before the time limit, what would be the procedure to check it back in?

In a way, it seems like MS should have spun it differently. Rather than compare it to the old console model, compare it more to the current mobile model. If you're going to advertise, accentuate the positives. Something like "The Xbox one is a new generation of console based on digital downloads rather than old fashioned discs. However, we realize not everyone is at the point of being able to download such awesomely large games, so for now we'll also have installer discs available. (i.e. sneakernet). We've also innovated with new features that lets you share your digital games with and potentially even transfer them to other accounts."

The big problem is price. They can say what they want about going after non-gamers with the other features, but at $500 the only people buying these will be hardcore gamers. Tech savvy, DRM averse, possibly electronically paranoid hardcore gamers. "Regular people" won't buy this until a price drop or two.

That being said, even though MS priced the XB1 to appeal to a specific group, included features which anger that group and responded by flipping them off, dropping the mic and walking off stage...

The internet is full of impotent rage, this thing is going to print money.

The always on requirement is stupid. I want to bring this 500 pound brick with me on the bus and play on my commute, and I want to bring this with me to the park and play there, too. I also want to play this on the moon.

Get over it, people. This thing only belongs in your living room, and if you don't have internet access there, then maybe it's time to get out of 1985. Poor/spotty connection? You can play on it offline for an hour, so if you can consistently get just one connection every hour, you can play all day long.

I just don't get all this. I really don't. I've never, EVER liked consoles. The gaming experience is, quite frankly, lame compared to a PC. There has been nothing until now that made me even consider buying an Xbox. Okay, I get that there are complaints from the hardcore console gamers. But the very features you all are complaining about are the ones that actually are drawing to purchase a console for the first time. I'll likely never use the gaming features. I can see using just about everything else in the device. But, of all the issues you people are complaining about, the always-on thing is the one that has me most baffled. Who DOESN'T have always-on internet? Seriously. And are we really that limited in our recognition of where gaming is going that we don't recognize that Steam-like services are exactly how we will get even CONSOLE games? The concept of reselling games is going to be archaic. This just amazes me that there's so much disappointment.

As of three years ago (the most recent stats I saw, so there has been change) roughly 40% of the country. Some by choice, some by economics, but a lot just because they have a condition known as "living in a rural area."

You need a 1.5Mbps connection for this to work. A year ago AT&T started, unannounced, throttling my previously consistently 9Mbps connection to 1Mbps to try to get me off DSL (worked, got me off AT&T internet period). My point is, I can right now call and get an internet connection that will not support the XB1. I have a choice, I know people, with money that play video games, that do not.

Paul those are all excellent. Points after reading Don Mattrick's comment it was basically a F you to those who have supported the Xbox platform over the years . I have owned both a Xbox and a Xbox 360 and have spent hundreds of dollars in games and accessories and have actively promoted the Xbox platform as a superior platform and this is coming from someone who also owns several gaming platforms over the years. Now there have been situations where my internet has gone out either from the modem being defective or going out and it a situation like that I now have a 500 dollar box that I can not do anything until I get my internet back up. I understand Microsoft needs to make money but don't do it at the expense of your loyal customer base who has heavily invested in your platform. The Xbox gamers have religiously stood by the platform throughout the entire red ring of death incident and have constantly bought each newer version of the Xbox 360 when released.

I disagree. The xbox is a great concept.. I look forward to the changes it will add to my life. The tv is useless to me as I don't even have tv.. I could get satellite but its doubtful at this time if telus bell or shaw will have it working with the xbox one as of yet. I do game and would love a system that works. always updated.. GREAT!! so what its on. big deal . I have internet I pay for it it can use it. I cant wait for the day I say xbox on.. and xbox play "name of game" and I never have to sit and hit update!!! its always on. if people feel they don't need Kinect well I bearly use mine but watching movies on there and using the controls vers finding the remote are amazing. now with blue ray I will have that control too. wish my smart tv had that integration. .. you talk about the small box thing all the time. well just buy a new tv its built right in. no box at all. but I will still use my one and I preordered it on day ONE!

I agree that Microsoft should make a version of the console that doesn't ship with the Kinect. I wouldn't but it because I like the features that the Kinect brings but there are people who either don't care, don't see what Kinect brings or they're just stupid and think Microsoft is going to watch them play Halo in their underwear.

I don't think Microsoft should take away the live TV features. TV is dying but its not dead and won't die until all programing becomes on-demand and easily accessible. I think this will happen anywhere between 2 and 10 years probably guessing closer to 10 knowing media companies.

I do think they should fix the used and shared games thing. When we bought music or movies and then decided to sell a CD to a second hand store the record labels didn't get money when someone else bought that CD again. Same with used cars, a car manufacturer doesn't make money off of the resale of a used car...or anything else that is used. So why should games be any different?

The always on I don't find a big deal, and people I know don't find it a big deal (we don't find the Kinect "issue" a big deal either. I guess maybe they should let you turn it off to shut the complainers up. If people want to loose function because they're scared then let them loose function while the rest of us enjoy everything the Xbox One can do.

Is Microsoft handling this right? No. You're right if they have to constantly explain themselves then something is wrong. Even thought I don't think it will cause the sales of to many consoles, there are people who will not buy the Xbox One because of these "issues". I don't know if it will be enough to make them #2 to Sony but it might and thats something they should fear.

I understand the desire to really want to push successes for a business and the products it sells, but seriously this whole gaming world is not the entire world. Gamers can do what they want, a company can do whatever it wants...I'm keeping my 360 either way. The One is great for what it is, people can buy it or not...the Kinect is part of that system and it is useless without it, but the 360 is all anyone really needs, the actual problem that I can see is the divide between the two systems and the games available for them, seeing as how some games will not be made for both at all. That is the ONLY real problem. Neither of these things will be of ANY use in the event of a world ending scenario, which is how everyone is treating everything that Microsoft does these days...sheesh, I need to get a life.

Its not all bad news. Rural Virginia is rolling out high speed internet and if Microsoft sponsor the same initiative in the other 194 countries in the world, they negate the whole debate for only a few billion in every country.

Scarily there is probably at least one person high up in Microsoft who is actually thinking that sounds like a good idea. ;)

All that needs to happen is for Google to play them along and let a rumour out that they are considering it, and Microsoft will start work on it next week.

Or they could stop worrying about nuclear submarines, Google, Apple and trying to make everything have "Could" tacked onto it and actually start a dialog with their customers. If they had, a more flexible DRM solution would have already been in place and Windows 8 would have been what Windows 8.1 is to become.

I feel like a lot of people are incredibly short sighted about the so-called "disastrous" features of the new xbox.

Right now, Sony is riding the momentum wave of blog-whining and internet dramaqueens about the "outcry" against msft's decisions. And it's very possible (I expect it, at least) that they will capitalize with the help of this wave in initial sales of the console.

But what happens a year later?
Xbox has an "always connected" requirement.
Kinect is completely integrated with the system and no longer "optional". This means that any and all game manufacturers (or other app/service providers) who deliever products for the xbobx can be absolutely certain that ALL xbox1 users WILL have their machine connected to the internet at all times AND. They can also be sure that a kinect is always present - as present as a controller. In fact, it's an additional controller. Not so with the ps4.

In fact, the ps4 is just more of the same. Only a bit faster and prettier. But it's essentially more of the same. Any and all games that will be delivered for the ps4 will be the exact same experience as we always had... going all the way back to the NES, MegaDrive etc.

App developers (be it games or something else) can NOT go all-in with cloud services or body-gestures (for PS eye), quite simply because they can't be guaranteed that both these options are present.

Contrasted with the Xbox, devs there WILL be able to go all-in on those features. They'll be able to take gaming to a whole new level. It opens up an incredible amount of options.

For example, if you have a game where you need to sneak past a bunch of guys, kinect could actually be used to use the sound of your living room to make the bunch of guys hear you etc.

That's just a stupid example, but it illustrates how the gaming experience on xbox1 could be taken to a whole new, never before possible, level. It can suck your entire surroundings into the fantasy world on your screen. And with the "illumiroom" technique, it can actually also do it in the other direction... Sucking your screen into your living room.

I'm just saying... when I objectively look at both systems and think about what these requirements and features mean to the eco system in the long run.... Well... let's just say that I'm looking forward to being immersed into games like never before.